Following my entry last week, I’ve been thinking a lot about the topic of Business History.  I really find it fascinating.  All of the dramatic successes, the colossal failures – people have been doing business for thousands of years. Think of all the lessons there are to learn!

Musing on the topic of Business History, I sat down at my desk this weekend to write my blog post.  Looking northeast out the window of my Brooklyn apartment, I had an epiphany.  One of the best artifacts of Business History was staring me right in the face: the Manhattan skyline.  In addition to being the central business hub of the United States, in some ways Manhattan is also the world’s largest trophy case.  Standing side by side, each skyscraper tells a story of business success and failure that spans decades or even centuries.

Researching furiously on Wikipedia, I read for hours about the stories behind many of the buildings.

Did you know that the Chrysler Building was funded and built not by Chrysler the car company, but rather by Walter P. Chrysler the individual?  He paid for the building entirely out of his own pocket so that he could pass the building down to his children (who eventually sold it).

Did you know that the building at 40 Wall Street, built by the Bank of Manhattan Trust company, was originally planned to be taller than the Chrysler building?  The architects of the Chrysler building omitted the large metallic spire from the building’s public plans.  Assembling the spire in secret, they successfully duped the architects of 40 Wall Street who thought their building was going to be taller and at that time win the title of world’s tallest building.

Of all the buildings I researched, the one I found most interesting was the Woolworth building.  Completed in 1913, the neo-Gothic building (somewhat resembling a cathedral) symbolizes the massive success of Frank Woolworth and the F. W. Woolworth Company.  It was the tallest building in the world from 1913 to 1930, and still stands as one of the fifty tallest buildings in the United States.  The building itself is absolutely grand – the lobby is lavishly decorated and the entire structure screams of success.

All of this begs the question: what happened to F. W. Woolworth the company?

F. W. Woolworth was once the worlds most powerful and innovative retailer.  They invented the concept of the “five-and-dime” store, a low-cost retailer where merchandise was set out on the shop floor instead of kept behind a counter.  Customers could touch and play with the merchandise on their own, rather than having a shopkeeper help them.  Today, this is a common retail practice, but at the time it was a radical innovation.

Founded originally in 1878, the company grew to its pinnacle in the 1960’s and early 1970’s.  Then, after nearly 100 years of operation, the company began its decline.  The innovations in sales, merchandising and customer service once unique to Woolworth’s had been copied and tweaked by three fierce competitors in the five-and-dime category: the S. S. Kresge Company, Dayton’s, and Walton’s Five and Dime.  Additionally, starting in the 1970’s, all of the five-and-dime stores started expanding into adjacent product categories.  Originally offering most merchandize for either five cents or ten cents, they started offering a much broader range of merchandise at all sorts of price points.

All four major five-and-dime stores tried to make the jump into the larger discount store category.  Woolworth’s started “Woolco,” while S. S. Kresge Company started Kmart, Dayton’s started Target, and Walton’s started Walmart.

Although Woolworth’s invented the five-and-dime concept and dominated the category, they were slow to adapt to the new reality of discount retailing.  Typical of most industry dominating corporations, they were hesitant to change their winning formula.  This resistance to change ultimately allowed Woolworth competitors to gain share and leave Woolworth’s behind.

In an almost ceremonial passing of the torch, symbolizing Woolworth’s defeat, on May 6th, 1991, Walmart replaced Woolworth’s as a component of the Dow Jones Industrial Average.

In the mid-90’s Woolworth’s saw more decline, renamed themselves Venator, and focused mostly on specialty and athletic stores.

Still struggling, around the year 2000 Woolworth’s (now Venator) moved out of the Woolworth building into offices on 34th street and changed the name of their company again to mirror the name of their only remaining successful chain: Foot Locker, Inc.

With just under 4,000 stores worldwide, Foot Locker continues to do business today, but it barely represents a shadow of the former F. W. Woolworth empire.  Walking into any Foot Locker store today, you’d never know that you were inside the store of a company that once revolutionized the retail experience.

The lesson here? I suppose it really goes back to Charles Darwin:

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

Business History, the Manhattan Skyline and Adapting to Change
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  • Hey, did you ever read The Innovator’s Dilemma? Given this, it strikes me as something you’d enjoy, and helps explain why organizations can find it difficult to change.

  • I read The Innovator’s Solution (and wrote about 3 blog posts about it – all of which you commented on :))

    I think Clayton Christensen is awesome and The Innovator’s Solution was life-changing. Think it’s worth picking up the Innovator’s Dilemma too? I figured most of his theories were covered in the one i read.

  • Oh, right. Whoops, forgot about that.

    It’s been a while, but I think the Innovator’s Dilemma would be worthwhile. IIRC, the Innovator’s Solution focuses on what to do to avoid said dilemma, but the earlier book provides a lot of “business history” (examples) of companies that fail.